Major Exchanges Lack Policies on Price Manipulation, Study Reveals
In the study, a number of exchanges refused to take part due to jurisdiction citations.
AG’s Report Highlights Flaws in Crypto Exchanges
Price manipulation is the current topic of discussion in the crypto community. The Attorney General of New York recently commissioned a study that discovered that some exchanges might be victims of fraud. The AG backed probe discovered that exchanges that assist push CME Group Inc.’s Bitcoin futures might have suffered price manipulation.
Bloomberg recently reported Kraken might be among affected exchanges. All the platforms support CME Group backed future market. The exchanges recently raised an alarm among authorities.
In the probe, the AG further revealed that Bitstamp and itBit lack regulations for tackling manipulations in the industry. The probe further added that Kraken declined to take part in the study by the AG’s office. Bloomberg further reports that Kraken was being defensive with a bizarre explanation. Kraken boss has already been quoted terming the initiative as an insult.
Apart from Kraken, Binance and Gate.io, Huobo were other firms that declined to take part in the process. All the platform pointed out that they do not permit exchanges from New York as the reason for their failure to take part.
The failure to take part has raised concerns in the market. According to experts, there might be chances that futures anchored on CME’s are anchored on prices might be controlled by manipulators.
Manipulation is hurting the industry. Over the recent months, the SEC has been turning down proposals to set up Bitcoin ETF. Experts consider Bitcoin ETF as the next propeller for the bull run. If successful, institutional funds will find an easy way of joining the crypto world.
At the moment, SEC is keenly following top exchanges for any chances of manipulation. Experts argue that Bitcoin ETF will not be approved anytime soon until SEC is sure the industry is free from manipulation.
According to the AG, residents of New York require transparency in the exchange market. He noted that many cryptos do not have policies to cushion themselves from manipulations. He added that, at the moment, exchanges do not have an effective mechanism in place to fight manipulation.
Other Findings from the Report
The initiative by the AG was launched in April this year. About 13 exchanges were asked to surrender information on standards set in place to fight manipulation. Four of the exchanges refused to take part on the grounds that they do not permit trading in New York.
It also emerged that section trading platforms are responsible for coming up with a possible conflict of interest. The report highlighted that employees might have access to data on client transactions and crypto additions.
Additionally, it emerged that exchanges are yet to roll out policies to fight abusive trading. The report notes that they lack instant, market details surveillance capabilities. They are required to borrow a leaf from traditional trading exchanges.